Island Top on SPX

Well obviously SPX didn’t do the higher high that I would have preferred, and this morning’s gap down broke down through rising wedge support and also gapped back through the open breakaway gap up from 2839.25. This currently leaves a decent quality island top on SPX and an open breakaway gap down from 2853.53 that I wouldn’t expect to see filled until the current decline is finished.

No clear reversal pattern yet, though there is a poor to medium-quality H&S option that I have marked on the chart below. The minimum targets I would generally be looking for on a break of a rising wedge like this are the 38.2% or 50% retracement targets in the 2797 or 2773 areas respectively. SPX 60min chart:

Are there any important support levels that didn’t break this morning? Yes, rising wedge support on TF has been tested but not yet broken, and there is a possible 60min buy signal brewing there that I’m watching with interest. I’m not expecting a strong reversal to start here but this does give the bulls a potential opening. We’ll see. TF Mar 60min chart:

Written by:

Richard Chappell

Jack is a 20 year retail trading veteran and co-founder of The Art Of Chart. He started his blog at channelsandpatterns.net in 2010 and since has published tens of thousands of charts looking at hundreds of trading instruments across most tradeable markets, doing original work mainly in the areas of trendlines, patterns and divergences. At The Art Of Chart Jack has taught trading skills, technical analysis, and the discipline and trader psychology that allow those to be used effectively in trading.

30th Jan 2018

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